Recent high profile investigations, significant media coverage and union/ACTU campaigns on what has been labelled as “wage theft” and a business “orgy of greed” have certainly highlighted for Australian employers their ongoing need to comply with the Fair Work Act, National Employment Standard and industry modern awards, but is the problems as large as proponents say?

 

Unions argue that recalcitrant Australian employers are engaged in “systematic and deliberate underpayment of wages and entitlements to Australian workers”. In my view there is limited evidence supporting this fact. From my own experience in acting both as a prosecutor on behalf of the former Workplace Ombudsman and directly for employers in investigations and litigation commenced by the regulator, the vast majority of underpayment issues stem from a lack of employer knowledge, lack of access to appropriate information and resources and a misunderstanding of our very complex industrial relations and wages system in Australia. For example, in the highly reported Sunglasses Hut retail chain underpayment claim covered in recent media, the $2.3 million dollar underpayment to 620 of its employees was actually identified by the company itself.

 

The owner company of the retail business conducted its own audit and realised that they had failed under the retail industry award to agree in writing with its part time workers on a regular pattern of working hours and days resulting in consequentially a significant underpayment of overtime.

 

The employer in this case identified the pay error and reported itself to the Fair Work Ombudsman (‘FWO’) stating it had a poor understanding of the application of the modern award and relied on practices prior to the modern award system being commenced.

 

In my experience this misunderstanding of our complex system is a significant factor in what is now being called wage theft.

 

Whilst the use of the word “theft” by the union movement and left facing legal/industrial relation academics provides a suggestion of criminal conduct associated with wage underpayment, however there are currently no criminal offences on the legislative books which make underpayment of wages a criminal offence. This however looks likely to change given the Morrison government’s unveiling of proposed changes to the Fair Work Act including the introduction of criminal penalties for the worst and most deliberate cases of wages underpayment.

 

A discussion paper dealing with proposed criminal sanctions suggests that these should be similar to the “corrupting benefits” provisions of the Fair Work Act with criminal penalties of 10 years imprisonment and $1 million dollar fines for individuals and $5.25 million dollar fines for companies.